Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File Tax Extension For 2011

Free State Filing1040x Help1040 Us Individual Income Tax Return2011 Online Tax SoftwareFile 2011 Taxes In 2013 FreeFile 2012 State TaxesWww Freetaxusa ComFree State Tax Filing 2012Income Tax PreparationHow To File Tax Extension ElectronicallyIrs 1040x Form InstructionsAmending A Tax Return1040ez Instruction BookletFree Tax Filing H&r Block10 40 EzIrs Tax Amendment Form1040ez Tax Form 2010Filing 2012 Taxes For FreeAmend Federal Tax Return2011 Irs Form 1040Tax Amendment Form 2012Free Irs Tax Filing OnlineFiling Ez Form OnlineMyfreetaxes ReviewHow To File Amended Tax Return2011 Tax ReturnsFree Tax Filing 2011How To File 2012 Taxes In 2014Amending My 2011 Tax ReturnWhat Is Form 1040xHow To File Ez Tax FormFree Turbo Tax 2013 DownloadTaxact 2011 Free DownloadForm 1040x 2013H&r Block Free Tax File 2012Hrblock TaxcutFree State Income Tax Forms Online2013 Tax Forms 1040ez2010 Federal Tax Form 1040Free Tax Filing Back Taxes

File Tax Extension For 2011

File tax extension for 2011 Publication 596 - Main Content Table of Contents Chapter 1—Rules for EveryoneRule 1—Adjusted Gross Income (AGI) Limits Rule 2—You Must Have a Valid Social Security Number (SSN) Rule 3—Your Filing Status Cannot Be Married Filing Separately Rule 4—You Must Be a U. File tax extension for 2011 S. File tax extension for 2011 Citizen or Resident Alien All Year Rule 5—You Cannot File Form 2555 or Form 2555-EZ Rule 6—Your Investment Income Must Be $3,300 or Less Rule 7—You Must Have Earned Income Chapter 2—Rules If You Have a Qualifying ChildRule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer Chapter 3—Rules If You Do Not Have a Qualifying ChildRule 11—You Must Be at Least Age 25 but Under Age 65 Rule 12—You Cannot Be the Dependent of Another Person Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer Rule 14—You Must Have Lived in the United States More Than Half of the Year Chapter 4—Figuring and Claiming the EICRule 15—Earned Income Limits IRS Will Figure the EIC for You How To Figure the EIC Yourself Schedule EIC Chapter 5—Disallowance of the EICForm 8862 Are You Prohibited From Claiming the EIC for a Period of Years? Chapter 6—Detailed ExamplesExample 1—Sharon Rose Example 2—Cynthia and Jerry Grey Chapter 1—Rules for Everyone This chapter discusses Rules 1 through 7. File tax extension for 2011 You must meet all seven rules to qualify for the earned income credit. File tax extension for 2011 If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the publication. File tax extension for 2011 If you meet all seven rules in this chapter, then read either chapter 2 or chapter 3 (whichever applies) for more rules you must meet. File tax extension for 2011 Rule 1—Adjusted Gross Income (AGI) Limits Your adjusted gross income (AGI) must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File tax extension for 2011 Adjusted gross income (AGI). File tax extension for 2011   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. File tax extension for 2011   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. File tax extension for 2011 You do not need to read the rest of this publication. File tax extension for 2011 Example—AGI is more than limit. File tax extension for 2011 Your AGI is $38,550, you are single, and you have one qualifying child. File tax extension for 2011 You cannot claim the EIC because your AGI is not less than $37,870. File tax extension for 2011 However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. File tax extension for 2011 Community property. File tax extension for 2011   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. File tax extension for 2011 This is different from the community property rules that apply under Rule 7. File tax extension for 2011 Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). File tax extension for 2011 Any qualifying child listed on Schedule EIC also must have a valid SSN. File tax extension for 2011 (See Rule 8 if you have a qualifying child. File tax extension for 2011 ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. File tax extension for 2011 An example of a federally funded benefit is Medicaid. File tax extension for 2011 If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. File tax extension for 2011 S. File tax extension for 2011 citizen or permanent resident, ask the SSA for a new social security card without the legend. File tax extension for 2011 If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. File tax extension for 2011 S. File tax extension for 2011 Individual Income Tax Return, to claim the EIC. File tax extension for 2011 U. File tax extension for 2011 S. File tax extension for 2011 citizen. File tax extension for 2011   If you were a U. File tax extension for 2011 S. File tax extension for 2011 citizen when you received your SSN, you have a valid SSN. File tax extension for 2011 Valid for work only with INS authorization or DHS authorization. File tax extension for 2011   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. File tax extension for 2011 SSN missing or incorrect. File tax extension for 2011   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. File tax extension for 2011 Other taxpayer identification number. File tax extension for 2011   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). File tax extension for 2011 ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. File tax extension for 2011 No SSN. File tax extension for 2011   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File tax extension for 2011 You cannot claim the EIC. File tax extension for 2011 Getting an SSN. File tax extension for 2011   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5 with the SSA. File tax extension for 2011 You can get Form SS-5 online at www. File tax extension for 2011 socialsecurity. File tax extension for 2011 gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. File tax extension for 2011 Filing deadline approaching and still no SSN. File tax extension for 2011   If the filing deadline is approaching and you still do not have an SSN, you have two choices. File tax extension for 2011 Request an automatic 6-month extension of time to file your return. File tax extension for 2011 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. File tax extension for 2011 S. File tax extension for 2011 Individual Income Tax Return. File tax extension for 2011 For more information, see the instructions for Form 4868. File tax extension for 2011 File the return on time without claiming the EIC. File tax extension for 2011 After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. File tax extension for 2011 Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. File tax extension for 2011 Rule 3—Your Filing Status Cannot Be “Married Filing Separately” If you are married, you usually must file a joint return to claim the EIC. File tax extension for 2011 Your filing status cannot be “Married filing separately. File tax extension for 2011 ” Spouse did not live with you. File tax extension for 2011   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. File tax extension for 2011 In that case, you may be able to claim the EIC. File tax extension for 2011 For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. File tax extension for 2011 Rule 4—You Must Be a U. File tax extension for 2011 S. File tax extension for 2011 Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. File tax extension for 2011 You can use that filing status only if one spouse is a U. File tax extension for 2011 S. File tax extension for 2011 citizen or resident alien and you choose to treat the nonresident spouse as a U. File tax extension for 2011 S. File tax extension for 2011 resident. File tax extension for 2011 If you make this choice, you and your spouse are taxed on your worldwide income. File tax extension for 2011 If you need more information on making this choice, get Publication 519, U. File tax extension for 2011 S. File tax extension for 2011 Tax Guide for Aliens. File tax extension for 2011 If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). File tax extension for 2011 Rule 5—You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. File tax extension for 2011 You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. File tax extension for 2011 U. File tax extension for 2011 S. File tax extension for 2011 possessions are not foreign countries. File tax extension for 2011 See Publication 54, Tax Guide for U. File tax extension for 2011 S. File tax extension for 2011 Citizens and Resident Aliens Abroad, for more detailed information. File tax extension for 2011 Rule 6—Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. File tax extension for 2011 If your investment income is more than $3,300, you cannot claim the credit. File tax extension for 2011 Form 1040EZ. File tax extension for 2011   If you file Form 1040EZ, your investment income is the total of the amount on line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. File tax extension for 2011 Form 1040A. File tax extension for 2011   If you file Form 1040A, your investment income is the total of the amounts on lines 8a (taxable interest), 8b (tax-exempt interest), 9a (ordinary dividends), and 10 (capital gain distributions) on that form. File tax extension for 2011 Form 1040. File tax extension for 2011   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. File tax extension for 2011    Worksheet 1. File tax extension for 2011 Investment Income If You Are Filing Form 1040 Use this worksheet to figure investment income for the earned income credit when you file Form 1040. File tax extension for 2011 Interest and Dividends         1. File tax extension for 2011 Enter any amount from Form 1040, line 8a 1. File tax extension for 2011   2. File tax extension for 2011 Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. File tax extension for 2011   3. File tax extension for 2011 Enter any amount from Form 1040, line 9a 3. File tax extension for 2011   4. File tax extension for 2011 Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. File tax extension for 2011 (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. File tax extension for 2011 ) 4. File tax extension for 2011   Capital Gain Net Income         5. File tax extension for 2011 Enter the amount from Form 1040, line 13. File tax extension for 2011 If the amount on that line is a loss, enter -0- 5. File tax extension for 2011       6. File tax extension for 2011 Enter any gain from Form 4797, Sales of Business Property, line 7. File tax extension for 2011 If the amount on that line is a loss, enter -0-. File tax extension for 2011 (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. File tax extension for 2011 ) 6. File tax extension for 2011       7. File tax extension for 2011 Substract line 6 of this worksheet from line 5 of this worksheet. File tax extension for 2011 (If the result is less than zero, enter -0-. File tax extension for 2011 ) 7. File tax extension for 2011   Royalties and Rental Income From Personal Property         8. File tax extension for 2011 Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21 8. File tax extension for 2011       9. File tax extension for 2011 Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36 9. File tax extension for 2011       10. File tax extension for 2011 Subtract the amount on line 9 of this worksheet from the amount on line 8. File tax extension for 2011 (If the result is less than zero, enter -0-. File tax extension for 2011 ) 10. File tax extension for 2011   Passive Activities         11. File tax extension for 2011 Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. File tax extension for 2011 (g)), 34a (col. File tax extension for 2011 (d)), or 40). File tax extension for 2011 (See instructions below for lines 11 and 12. File tax extension for 2011 ) 11. File tax extension for 2011       12. File tax extension for 2011 Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. File tax extension for 2011 (f)), 34b (col. File tax extension for 2011 (c)), or 40). File tax extension for 2011 (See instructions below for lines 11 and 12. File tax extension for 2011 ) 12. File tax extension for 2011       13. File tax extension for 2011 Combine the amounts on lines 11 and 12 of this worksheet. File tax extension for 2011 (If the result is less than zero, enter -0-. File tax extension for 2011 ) 13. File tax extension for 2011   14. File tax extension for 2011 Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. File tax extension for 2011 Enter the total. File tax extension for 2011 This is your investment income 14. File tax extension for 2011   15. File tax extension for 2011 Is the amount on line 14 more than $3,300? ❑ Yes. File tax extension for 2011 You cannot take the credit. File tax extension for 2011  ❑ No. File tax extension for 2011 Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule 7, next). File tax extension for 2011       Instructions for lines 11 and 12. File tax extension for 2011 In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss) included on line 26 of Schedule E or any amount included in your earned income. File tax extension for 2011 To find out if the income on line 26 or line 40 of Schedule E is from a passive activity, see the Schedule E instructions. File tax extension for 2011 If any of the rental real estate income (or loss) included on Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26. File tax extension for 2011 Worksheet 2. File tax extension for 2011 Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. File tax extension for 2011 Note. File tax extension for 2011 Fill out a separate Worksheet 2 for each Form 8814. File tax extension for 2011     1. File tax extension for 2011 Enter the amount from Form 8814, line 2a 1. File tax extension for 2011   2. File tax extension for 2011 Enter the amount from Form 8814, line 2b 2. File tax extension for 2011   3. File tax extension for 2011 Subtract line 2 from line 1 3. File tax extension for 2011   4. File tax extension for 2011 Enter the amount from Form 8814, line 1a 4. File tax extension for 2011   5. File tax extension for 2011 Add lines 3 and 4 5. File tax extension for 2011   6. File tax extension for 2011 Enter the amount of the child's Alaska Permanent Fund dividend 6. File tax extension for 2011   7. File tax extension for 2011 Divide line 6 by line 5. File tax extension for 2011 Enter the result as a decimal (rounded to at least three places) 7. File tax extension for 2011   8. File tax extension for 2011 Enter the amount from Form 8814, line 12 8. File tax extension for 2011   9. File tax extension for 2011 Multiply line 7 by line 8 9. File tax extension for 2011   10. File tax extension for 2011 Subtract line 9 from line 8. File tax extension for 2011 Enter the result on line 4 of Worksheet 1 10. File tax extension for 2011     (If filing more than one Form 8814, enter on line 4 of Worksheet 1 the total of the amounts on line 10 of all Worksheets 2. File tax extension for 2011 )     Example—completing Worksheet 2. File tax extension for 2011 Your 10-year-old child has taxable interest income of $400, an Alaska Permanent Fund dividend of $1,000, and ordinary dividends of $1,100, of which $500 are qualified dividends. File tax extension for 2011 You choose to report this income on your return. File tax extension for 2011 You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. File tax extension for 2011 After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. File tax extension for 2011 On Worksheet 2, you enter $2,100 on line 1, $500 on line 2, $1,600 on line 3, $400 on line 4, $2,000 on line 5, $1,000 on line 6, 0. File tax extension for 2011 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. File tax extension for 2011 You then enter $200 on line 4 of Worksheet 1. File tax extension for 2011 Rule 7—You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. File tax extension for 2011 If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. File tax extension for 2011 If you are an employee, earned income includes all the taxable income you get from your employer. File tax extension for 2011 Rule 15 has information that will help you figure the amount of your earned income. File tax extension for 2011 If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. File tax extension for 2011 Earned Income Earned income includes all of the following types of income. File tax extension for 2011 Wages, salaries, tips, and other taxable employee pay. File tax extension for 2011 Employee pay is earned income only if it is taxable. File tax extension for 2011 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. File tax extension for 2011 But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. File tax extension for 2011 Net earnings from self-employment. File tax extension for 2011 Gross income received as a statutory employee. File tax extension for 2011 Wages, salaries, and tips. File tax extension for 2011    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. File tax extension for 2011 You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). File tax extension for 2011 Nontaxable combat pay election. File tax extension for 2011   You can elect to include your nontaxable combat pay in earned income for the earned income credit. File tax extension for 2011 The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. File tax extension for 2011 Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. File tax extension for 2011 For details, see Nontaxable combat pay in chapter 4. File tax extension for 2011 Net earnings from self-employment. File tax extension for 2011   You may have net earnings from self-employment if: You own your own business, or You are a minister or member of a religious order. File tax extension for 2011 Minister's housing. File tax extension for 2011   The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. File tax extension for 2011 For that reason, it is included in earned income for the EIC (except in the cases described in Approved Form 4361 or Form 4029 , below). File tax extension for 2011 Statutory employee. File tax extension for 2011   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. File tax extension for 2011 You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). File tax extension for 2011 Strike benefits. File tax extension for 2011   Strike benefits paid by a union to its members are earned income. File tax extension for 2011 Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. File tax extension for 2011 Each approved form exempts certain income from social security taxes. File tax extension for 2011 Each form is discussed here in terms of what is or is not earned income for the EIC. File tax extension for 2011 Form 4361. File tax extension for 2011   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. File tax extension for 2011 This includes wages, salaries, tips, and other taxable employee compensation. File tax extension for 2011 A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. File tax extension for 2011 Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. File tax extension for 2011 Examples include fees for performing marriages and honoraria for delivering speeches. File tax extension for 2011 Form 4029. File tax extension for 2011   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. File tax extension for 2011 However, amounts you received as a self-employed individual do not count as earned income. File tax extension for 2011 Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. File tax extension for 2011 Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. File tax extension for 2011 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. File tax extension for 2011 You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. File tax extension for 2011 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. File tax extension for 2011 Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. File tax extension for 2011 Disability insurance payments. File tax extension for 2011   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. File tax extension for 2011 It does not matter whether you have reached minimum retirement age. File tax extension for 2011 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. File tax extension for 2011 ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. File tax extension for 2011 Do not include any of these items in your earned income. File tax extension for 2011 Earnings while an inmate. File tax extension for 2011   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. File tax extension for 2011 This includes amounts for work performed while in a work release program or while in a halfway house. File tax extension for 2011 Workfare payments. File tax extension for 2011   Nontaxable workfare payments are not earned income for the EIC. File tax extension for 2011 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. File tax extension for 2011 Community property. File tax extension for 2011   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. File tax extension for 2011 That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. File tax extension for 2011 Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. File tax extension for 2011 Nevada, Washington, and California domestic partners. File tax extension for 2011   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. File tax extension for 2011 Your earned income for the EIC does not include any amount earned by your partner. File tax extension for 2011 Your earned income includes the entire amount you earned. File tax extension for 2011 For details, see Publication 555. File tax extension for 2011 Conservation Reserve Program (CRP) payments. File tax extension for 2011   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. File tax extension for 2011 Nontaxable military pay. File tax extension for 2011   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. File tax extension for 2011 Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). File tax extension for 2011 See Publication 3, Armed Forces' Tax Guide, for more information. File tax extension for 2011    Combat pay. File tax extension for 2011 You can elect to include your nontaxable combat pay in earned income for the EIC. File tax extension for 2011 See Nontaxable combat pay in chapter 4. File tax extension for 2011 Chapter 2—Rules If You Have a Qualifying Child If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. File tax extension for 2011 This chapter discusses Rules 8 through 10. File tax extension for 2011 You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit with a qualifying child. File tax extension for 2011 You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. File tax extension for 2011 (You cannot file Form 1040EZ. File tax extension for 2011 ) You also must complete Schedule EIC and attach it to your return. File tax extension for 2011 If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. File tax extension for 2011 No qualifying child. File tax extension for 2011   If you do not meet Rule 8, you do not have a qualifying child. File tax extension for 2011 Read chapter 3 to find out if you can get the earned income credit without a qualifying child. File tax extension for 2011 Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. File tax extension for 2011 The fours tests are: Relationship, Age, Residency, and Joint return. File tax extension for 2011 The four tests are illustrated in Figure 1. File tax extension for 2011 The paragraphs that follow contain more information about each test. File tax extension for 2011 Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). File tax extension for 2011 The following definitions clarify the relationship test. File tax extension for 2011 Adopted child. File tax extension for 2011   An adopted child is always treated as your own child. File tax extension for 2011 The term “adopted child” includes a child who was lawfully placed with you for legal adoption. File tax extension for 2011 Foster child. File tax extension for 2011   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. File tax extension for 2011 (An authorized placement agency includes a state or local government agency. File tax extension for 2011 It also includes a tax-exempt organization licensed by a state. File tax extension for 2011 In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. File tax extension for 2011 ) Example. File tax extension for 2011 Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. File tax extension for 2011 Debbie is your foster child. File tax extension for 2011 Figure 1. File tax extension for 2011 Tests for Qualifying Child Please click here for the text description of the image. File tax extension for 2011 Conditions for Qualifying Child Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly, or Permanently and totally disabled at any time during 2013, regardless of age. File tax extension for 2011 The following examples and definitions clarify the age test. File tax extension for 2011 Example 1—child not under age 19. File tax extension for 2011 Your son turned 19 on December 10. File tax extension for 2011 Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. File tax extension for 2011 Example 2—child not younger than you or your spouse. File tax extension for 2011 Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. File tax extension for 2011 He is not disabled. File tax extension for 2011 Both you and your spouse are 21 years old, and you file a joint return. File tax extension for 2011 Your brother is not your qualifying child because he is not younger than you or your spouse. File tax extension for 2011 Example 3—child younger than your spouse but not younger than you. File tax extension for 2011 The facts are the same as in Example 2 except that your spouse is 25 years old. File tax extension for 2011 Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. File tax extension for 2011 Student defined. File tax extension for 2011   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. File tax extension for 2011   The 5 calendar months need not be consecutive. File tax extension for 2011   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. File tax extension for 2011 School defined. File tax extension for 2011   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. File tax extension for 2011 However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. File tax extension for 2011 Vocational high school students. File tax extension for 2011   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. File tax extension for 2011 Permanently and totally disabled. File tax extension for 2011   Your child is permanently and totally disabled if both of the following apply. File tax extension for 2011 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. File tax extension for 2011 A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. File tax extension for 2011 Residency Test Your child must have lived with you in the United States for more than half of 2013. File tax extension for 2011 The following definitions clarify the residency test. File tax extension for 2011 United States. File tax extension for 2011   This means the 50 states and the District of Columbia. File tax extension for 2011 It does not include Puerto Rico or U. File tax extension for 2011 S. File tax extension for 2011 possessions such as Guam. File tax extension for 2011 Homeless shelter. File tax extension for 2011   Your home can be any location where you regularly live. File tax extension for 2011 You do not need a traditional home. File tax extension for 2011 For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. File tax extension for 2011 Military personnel stationed outside the United States. File tax extension for 2011   U. File tax extension for 2011 S. File tax extension for 2011 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. File tax extension for 2011 Extended active duty. File tax extension for 2011   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. File tax extension for 2011 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. File tax extension for 2011 Birth or death of child. File tax extension for 2011    child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. File tax extension for 2011 Temporary absences. File tax extension for 2011   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. File tax extension for 2011 Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. File tax extension for 2011 Kidnapped child. File tax extension for 2011   A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. File tax extension for 2011 The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. File tax extension for 2011 This treatment applies for all years until the child is returned. File tax extension for 2011 However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. File tax extension for 2011   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. File tax extension for 2011 Joint Return Test To meet this test, the child cannot file a joint return for the year. File tax extension for 2011 Exception. File tax extension for 2011   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. File tax extension for 2011 Example 1—child files joint return. File tax extension for 2011 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. File tax extension for 2011 He earned $25,000 for the year. File tax extension for 2011 The couple files a joint return. File tax extension for 2011 Because your daughter and her husband file a joint return, she is not your qualifying child. File tax extension for 2011 Example 2—child files joint return to get refund of tax withheld. File tax extension for 2011 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. File tax extension for 2011 They do not have a child. File tax extension for 2011 Neither is required to file a tax return. File tax extension for 2011 Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. File tax extension for 2011 The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. File tax extension for 2011 Example 3—child files joint return to claim American opportunity credit. File tax extension for 2011 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. File tax extension for 2011 He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. File tax extension for 2011 Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to claim a refund of income tax withheld or estimated tax paid. File tax extension for 2011 The exception to the joint return test does not apply, so your son is not your qualifying child. File tax extension for 2011 Married child. File tax extension for 2011   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) described later. File tax extension for 2011    Social security number. File tax extension for 2011 Your qualifying child must have a valid social security number (SSN), unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. File tax extension for 2011 You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. File tax extension for 2011   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. File tax extension for 2011 For more information about SSNs, see Rule 2. File tax extension for 2011 Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. File tax extension for 2011 However, only one of these persons can actually treat the child as a qualifying child. File tax extension for 2011 Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). File tax extension for 2011 The exemption for the child. File tax extension for 2011 The child tax credit. File tax extension for 2011 Head of household filing status. File tax extension for 2011 The credit for child and dependent care expenses. File tax extension for 2011 The exclusion for dependent care benefits. File tax extension for 2011 The EIC. File tax extension for 2011 The other person cannot take any of these benefits based on this qualifying child. File tax extension for 2011 In other words, you and the other person cannot agree to divide these tax benefits between you. File tax extension for 2011 The other person cannot take any of these tax benefits unless he or she has a different qualifying child. File tax extension for 2011 The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. File tax extension for 2011 However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. File tax extension for 2011 Tiebreaker rules. File tax extension for 2011   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. File tax extension for 2011 If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. File tax extension for 2011 If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. File tax extension for 2011 If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. File tax extension for 2011 If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. File tax extension for 2011 If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. File tax extension for 2011 If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. File tax extension for 2011 If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. File tax extension for 2011 See Example 8. File tax extension for 2011   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. File tax extension for 2011 See Examples 1 through 13. File tax extension for 2011   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in chapter 3 for people who do not have a qualifying child. File tax extension for 2011 If the other person cannot claim the EIC. File tax extension for 2011   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. File tax extension for 2011 See Examples 6 and 7. File tax extension for 2011 But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier in this chapter. File tax extension for 2011 Examples. File tax extension for 2011    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. File tax extension for 2011 Example 1—child lived with parent and grandparent. File tax extension for 2011 You and your 2-year-old son Jimmy lived with your mother all year. File tax extension for 2011 You are 25 years old, unmarried, and your AGI is $9,000. File tax extension for 2011 Your only income was $9,000 from a part-time job. File tax extension for 2011 Your mother's only income was $20,000 from her job, and her AGI is $20,000. File tax extension for 2011 Jimmy's father did not live with you or Jimmy. File tax extension for 2011 The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. File tax extension for 2011 Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. File tax extension for 2011 However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier in this chapter for which that person qualifies). File tax extension for 2011 He is not a qualifying child of anyone else, including his father. File tax extension for 2011 If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). File tax extension for 2011 Example 2—parent has higher AGI than grandparent. File tax extension for 2011 The facts are the same as in Example 1 except your AGI is $25,000. File tax extension for 2011 Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. File tax extension for 2011 Only you can claim him. File tax extension for 2011 Example 3—two persons claim same child. File tax extension for 2011 The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. File tax extension for 2011 In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. File tax extension for 2011 The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. File tax extension for 2011 Example 4—qualifying children split between two persons. File tax extension for 2011 The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. File tax extension for 2011 Only one of you can claim each child. File tax extension for 2011 However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. File tax extension for 2011 For example, if you claim one child, your mother can claim the other two. File tax extension for 2011 Example 5—taxpayer who is a qualifying child. File tax extension for 2011 The facts are the same as in Example 1 except that you are only 18 years old. File tax extension for 2011 This means you are a qualifying child of your mother. File tax extension for 2011 Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. File tax extension for 2011 Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. File tax extension for 2011 If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. File tax extension for 2011 Example 6—grandparent with too much earned income to claim EIC. File tax extension for 2011 The facts are the same as in Example 1 except that your mother earned $50,000 from her job. File tax extension for 2011 Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. File tax extension for 2011 Example 7—parent with too much earned income to claim EIC. File tax extension for 2011 The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. File tax extension for 2011 Your earned income is too high for you to claim the EIC. File tax extension for 2011 But your mother cannot claim the EIC either, because her AGI is not higher than yours. File tax extension for 2011 Example 8—child lived with both parents and grandparent. File tax extension for 2011 The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have AGI of $30,000 on a joint return. File tax extension for 2011 If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. File tax extension for 2011 Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. File tax extension for 2011 In other words, each parent's AGI can be treated as $15,000. File tax extension for 2011 Example 9—separated parents. File tax extension for 2011 You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. File tax extension for 2011 In August and September, Joey lived with you. File tax extension for 2011 For the rest of the year, Joey lived with your husband, who is Joey's father. File tax extension for 2011 Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. File tax extension for 2011 At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the Special rule for divorced or separated parents (or parents who live apart) does not apply. File tax extension for 2011 You and your husband will file separate returns. File tax extension for 2011 Your husband agrees to let you treat Joey as a qualifying child. File tax extension for 2011 This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. File tax extension for 2011 However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. File tax extension for 2011 See Rule 3. File tax extension for 2011 Example 10—separated parents claim same child. File tax extension for 2011 The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. File tax extension for 2011 In this case, only your husband will be allowed to treat Joey as a qualifying child. File tax extension for 2011 This is because, during 2013, the boy lived with him longer than with you. File tax extension for 2011 You cannot claim the EIC (either with or without a qualifying child). File tax extension for 2011 However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. File tax extension for 2011 See Rule 3. File tax extension for 2011 Example 11—unmarried parents. File tax extension for 2011 You, your 5-year-old son, and your son's father lived together all year. File tax extension for 2011 You and your son's father are not married. File tax extension for 2011 Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. File tax extension for 2011 Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. File tax extension for 2011 Neither of you had any other income. File tax extension for 2011 Your son's father agrees to let you treat the child as a qualifying child. File tax extension for 2011 This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. File tax extension for 2011 Example 12—unmarried parents claim same child. File tax extension for 2011 The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. File tax extension for 2011 In this case, only your son's father will be allowed to treat your son as a qualifying child. File tax extension for 2011 This is because his AGI, $14,000, is more than your AGI, $12,000. File tax extension for 2011 You cannot claim the EIC (either with or without a qualifying child). File tax extension for 2011 Example 13—child did not live with a parent. File tax extension for 2011 You and your 7-year-old niece, your sister's child, lived with your mother all year. File tax extension for 2011 You are 25 years old, and your AGI is $9,300. File tax extension for 2011 Your only income was from a part-time job. File tax extension for 2011 Your mother's AGI is $15,000. File tax extension for 2011 Her only income was from her job. File tax extension for 2011 Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. File tax extension for 2011 Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. File tax extension for 2011 However, only your mother can treat her as a qualifying child. File tax extension for 2011 This is because your mother's AGI, $15,000, is more than your AGI, $9,300. File tax extension for 2011 Special rule for divorced or separated parents (or parents who live apart). File tax extension for 2011   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. File tax extension for 2011 The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all time during the last 6 months of 2013, whether or not they are or were married. File tax extension for 2011 The child received over half of his or her support for the year from the parents. File tax extension for 2011 The child is in the custody of one or both parents for more than half of 2013. File tax extension for 2011 Either of the following statements is true. File tax extension for 2011 The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. File tax extension for 2011 If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. File tax extension for 2011 A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. File tax extension for 2011 For details, see Publication 501. File tax extension for 2011 Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. File tax extension for 2011 Applying Rule 9 to divorced or separated parents (or parents who live apart). File tax extension for 2011   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. File tax extension for 2011 However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. File tax extension for 2011 If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. File tax extension for 2011 Example 1. File tax extension for 2011 You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. File tax extension for 2011 Your AGI is $10,000. File tax extension for 2011 Your mother’s AGI is $25,000. File tax extension for 2011 Your son's father did not live with you or your son. File tax extension for 2011 Under the Special rule for divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. File tax extension for 2011 However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. File tax extension for 2011 You and your mother did not have any child care expenses or dependent care benefits. File tax extension for 2011 If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. File tax extension for 2011 Example 2. File tax extension for 2011 The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. File tax extension for 2011 Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. File tax extension for 2011 Example 3. File tax extension for 2011 The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. File tax extension for 2011 Your mother also claims him as a qualifying child for head of household filing status. File tax extension for 2011 You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. File tax extension for 2011 The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. File tax extension for 2011 Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. File tax extension for 2011 ) if all of the following statements are true. File tax extension for 2011 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. File tax extension for 2011 Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. File tax extension for 2011 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. File tax extension for 2011 You lived with that person in the United States for more than half of the year. File tax extension for 2011 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). File tax extension for 2011 For more details about the tests to be a qualifying child, see Rule 8. File tax extension for 2011 If you are a qualifying child of another taxpayer, you cannot claim the EIC. File tax extension for 2011 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. File tax extension for 2011 Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). File tax extension for 2011 Example. File tax extension for 2011 You and your daughter lived with your mother all year. File tax extension for 2011 You are 22 years old, unmarried, and attended a trade school full time. File tax extension for 2011 You had a part-time job and earned $5,700. File tax extension for 2011 You had no other income. File tax extension for 2011 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. File tax extension for 2011 She can claim the EIC if she meets all the other requirements. File tax extension for 2011 Because you are your mother's qualifying child, you cannot claim the EIC. File tax extension for 2011 This is so even if your mother cannot or does not claim the EIC. File tax extension for 2011 Child of person not required to file a return. File tax extension for 2011   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you met the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. File tax extension for 2011 Example 1—return not required. File tax extension for 2011 The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. File tax extension for 2011 As a result, you are not your mother's qualifying child. File tax extension for 2011 You can claim the EIC if you meet all the other requirements to do so. File tax extension for 2011 Example 2—return filed to get refund of tax withheld. File tax extension for 2011 The facts are the same as in Example 1 except your mother had wages of $1,500 and had income tax withheld from her wages. File tax extension for 2011 She files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. File tax extension for 2011 As a result, you are not your mother's qualifying child. File tax extension for 2011 You can claim the EIC if you meet all the other requirements to do so. File tax extension for 2011 Example 3—return filed to get EIC. File tax extension for 2011 The facts are the same as in Example 2 except your mother claimed the EIC on her return. File tax extension for 2011 Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. File tax extension for 2011 As a result, you are your mother's qualifying child. File tax extension for 2011 You cannot claim the EIC. File tax extension for 2011 Chapter 3—Rules If You Do Not Have a Qualifying Child Use this chapter if you do not have a qualifying child and have met all the rules in chapter 1. File tax extension for 2011 This chapter discusses Rules 11 through 14. File tax extension for 2011 You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. File tax extension for 2011 You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. File tax extension for 2011 If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. File tax extension for 2011 If you have a qualifying child. File tax extension for 2011   If you meet Rule 8, you have a qualifying child. File tax extension for 2011 If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. File tax extension for 2011 Rule 11—You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. File tax extension for 2011 If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. File tax extension for 2011 It does not matter which spouse meets the age test, as long as one of the spouses does. File tax extension for 2011 You meet the age test if you were born after December 31, 1948, and before January 2, 1989. File tax extension for 2011 If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. File tax extension for 2011 If neither you nor your spouse meets the age test, you cannot claim the EIC. File tax extension for 2011 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File tax extension for 2011 Death of spouse. File tax extension for 2011   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. File tax extension for 2011 Example 1. File tax extension for 2011 You are age 28 and unmarried. File tax extension for 2011 You meet the age test. File tax extension for 2011 Example 2—spouse meets age test. File tax extension for 2011 You are married and filing a joint return. File tax extension for 2011 You are age 23 and your spouse is age 27. File tax extension for 2011 You meet the age test because your spouse is at least age 25 but under age 65. File tax extension for 2011 Example 3—spouse dies in 2013. File tax extension for 2011 You are married and filing a joint return with your spouse who died in August 2013. File tax extension for 2011 You are age 67. File tax extension for 2011 Your spouse would have become age 65 in November 2013. File tax extension for 2011 Because your spouse was under age 65 when she died, you meet the age test. File tax extension for 2011 Rule 12—You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. File tax extension for 2011 If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. File tax extension for 2011 If you are not sure whether someone else can claim you as a dependent, get Publication 501 and read the rules for claiming a dependent. File tax extension for 2011 If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. File tax extension for 2011 Example 1. File tax extension for 2011 In 2013, you were age 25, single, and living at home with your parents. File tax extension for 2011 You worked and were not a student. File tax extension for 2011 You earned $7,500. File tax extension for 2011 Your parents cannot claim you as a dependent. File tax extension for 2011 When you file your return, you claim an exemption for yourself by not checking the You box on line 5 of your Form 1040EZ and by entering $10,000 on that line. File tax extension for 2011 You meet this rule. File tax extension for 2011 You can claim the EIC if you meet all the other requirements. File tax extension for 2011 Example 2. File tax extension for 2011 The facts are the same as in Example 1, except that you earned $2,000. File tax extension for 2011 Your parents can claim you as a dependent but decide not to. File tax extension for 2011 You do not meet this rule. File tax extension for 2011 You cannot claim the credit because your parents could have claimed you as a dependent. File tax extension for 2011 Joint returns. File tax extension for 2011   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. File tax extension for 2011   However, another person may be able to claim you as a dependent if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. File tax extension for 2011 But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. File tax extension for 2011 Example 1—return filed to get refund of tax withheld. File tax extension for 2011 You are 26 years old. File tax extension for 2011 You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. File tax extension for 2011 Neither you nor your wife is required to file a tax return. File tax extension for 2011 You do not have a child. File tax extension for 2011 Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. File tax extension for 2011 Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. File tax extension for 2011 They can claim exemptions for you and your wife if all the other tests to do so are met. File tax extension for 2011 Example 2—return filed to get EIC. File tax extension for 2011 The facts are the same as in Example 1except no taxes were taken out of your pay. File tax extension for 2011 Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. File tax extension for 2011 Because claiming the EIC is your reason for filing the return, you are not filing it only to claim a refund of income tax withheld or estimated tax paid. File tax extension for 2011 Your parents cannot claim an exemption for either you or your wife. File tax extension for 2011 Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. File tax extension for 2011 ) if all of the following statements are true. File tax extension for 2011 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. File tax extension for 2011 Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. File tax extension for 2011 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. File tax extension for 2011 You lived with that person in the United States for more than half of the year. File tax extension for 2011 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). File tax extension for 2011 For more details about the tests to be a qualifying child, see Rule 8. File tax extension for 2011 If you are a qualifying child of another taxpayer, you cannot claim the EIC. File tax extension for 2011 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. File tax extension for 2011 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File tax extension for 2011 Example. File tax extension for 2011 You lived with your mother all year. File tax extension for 2011 You are age 26, unmarried, and permanently and totally disabled. File tax extension for 2011 Your only income was from a community center where you went three days a week to answer telephones. File tax extension for 2011 You earned $5,000 for the year and provided more than half of your own support. File tax extension for 2011 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. File tax extension for 2011 She can claim the EIC if she meets all the other requirements. File tax extension for 2011 Because you are a qualifying child of your mother, you cannot claim the EIC. File tax extension for 2011 This is so even if your mother cannot or does not claim the EIC. File tax extension for 2011 Joint returns. File tax extension for 2011   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. File tax extension for 2011   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. File tax extension for 2011 But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. File tax extension for 2011 Child of person not required to file a return. File tax extension for 2011   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. File tax extension for 2011 Example 1—return not required. File tax extension for 2011 You lived all year with your father. File tax extension for 2011 You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. File tax extension for 2011 You have no other income, no children, and provided more than half of your own support. File tax extension for 2011 Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. File tax extension for 2011 As a result, you are not your father's qualifying child. File tax extension for 2011 You can claim the EIC if you meet all the other requirements to do so. File tax extension for 2011 Example 2—return filed to get refund of tax withheld. File tax extension for 2011 The facts are the same as in Example 1 except your father had wages of $1,500 and had income tax withheld from his wages. File tax extension for 2011 He files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. File tax extension for 2011 As a result, you are not your father's qualifying child. File tax extension for 2011 You can claim the EIC if you meet all the other requirements to do so. File tax extension for 2011 Example 3—return filed to get EIC. File tax extension for 2011 The facts are the same as in Example 2 except your father claimed the EIC on his return. File tax extension for 2011 Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. File tax extension for 2011 As a result, you are your father's qualifying child. File tax extension for 2011 You cannot claim the EIC. File tax extension for 2011 Rule 14—You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. File tax extension for 2011 If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). File tax extension for 2011 United States. File tax extension for 2011   This means the 50 states and the District of Columbia. File tax extension for 2011 It does not include Puerto Rico or U. File tax extension for 2011 S. File tax extension for 2011 possessions such as Guam. File tax extension for 2011 Homeless shelter. File tax extension for 2011   Your home can be any location where you regularly live. File tax extension for 2011 You do not need a traditional home. File tax extension for 2011 If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. File tax extension for 2011 Military personnel stationed outside the United States. File tax extension for 2011   U. File tax extension for 2011 S. File tax extension for 2011 military personnel stationed outside the United States on extended active duty (defined in chapter 2) are considered to live in the United States during that duty period for purposes of the EIC. File tax extension for 2011 Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. File tax extension for 2011 You need to know the amount of your earned income to see if you meet the rule in this chapter. File tax extension for 2011 You also need to know that amount to figure your EIC. File tax extension for 2011 Rule 15—Earned Income Limits Your earned income must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. File tax extension for 2011 Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. File tax extension for 2011 Employee pay is earned income only if it is taxable. File tax extension for 2011 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. File tax extension for 2011 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. File tax extension for 2011 Earned income is explained in detail in Rule 7 in chapter 1. File tax extension for 2011 Figuring earned income. File tax extension for 2011   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. File tax extension for 2011   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. File tax extension for 2011   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). File tax extension for 2011 You will then reduce that amount by any amount included on that line and described in the following list. File tax extension for 2011 Scholarship or fellowship grants not reported on a Form W-2. File tax extension for 2011 A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. File tax extension for 2011 Inmate's income. File tax extension for 2011 Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. File tax extension for 2011 This includes amounts received for work performed while in a work release program or while in a halfway house. File tax extension for 2011 If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). File tax extension for 2011 Pension or annuity from deferred compensation plans. File tax extension for 2011 A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. File tax extension for 2011 If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). File tax extension for 2011 This amount may be reported in box 11 of your Form W-2. File tax extension for 2011 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. File tax extension for 2011 Clergy. File tax extension for 2011   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also re
Print - Click this link to Print this page

IRS Report on Avoiding Troubled Tax-Advantaged Bonds

The Internal Revenue Service office of Tax Exempt Bonds (TEB) released the report, Avoiding Troubled Tax-Advantaged Bonds. This report produced by the TEB Compliance Practice Research Team seeks to provide aid to issuers of tax-advantaged bonds municipal bonds. It identifies some considerations for issuers of such bonds and is TEB’s initial step toward producing public resource products that assist issuers in avoiding troubled transactions. For more than a decade, TEB observed some of the worst problems in the municipal industry and then witnessed the efforts taken (by leaders in state and local government, the professional communities that support them, and various regulatory bodies) to address them. Many of these complex compliance issues facing issuers of tax-advantaged municipal debt still exist.  

Publishing Avoiding Troubled Tax-Advantaged Bonds is a part of TEB’s continuing effort to provide practical steps and products that may be helpful to issuers of tax-advantaged municipal bonds. As such, we welcome comments and feedback from the tax-advantaged municipal bond community that provide further tools and clarification for issuers. Please submit your comments and feedback to TaxExemptBondQuestions@irs.gov inserting “Avoiding Troubled Tax-Advantaged Bonds Question” on the Subject: line.

The report covers three phases of the life cycle of bonds, each with various considerations, of which an issuer should be aware. These three identified phases are 1) the transaction development phase, 2) the transaction execution phase, and 3) the post-issuance phase. Watch for the TEB presentation of phase one “Transaction Development,” in an upcoming Webinar scheduled for this fall.

TEB hopes that the tax-exempt bond community will use this information to create related products beneficial to their members. These products will provide additional tools that facilitate issuer adoption of practices and procedures that avoid abusive or questionable transactions.

 

 

Page Last Reviewed or Updated: 26-Mar-2014

The File Tax Extension For 2011

File tax extension for 2011 4. File tax extension for 2011   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. File tax extension for 2011 Resident aliens are generally taxed in the same way as U. File tax extension for 2011 S. File tax extension for 2011 citizens. File tax extension for 2011 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business and how it is taxed. File tax extension for 2011 Topics - This chapter discusses: Income that is effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 Income that is not effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 Interrupted period of residence. File tax extension for 2011 Expatriation tax. File tax extension for 2011 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. File tax extension for 2011 Resident Aliens Resident aliens are generally taxed in the same way as U. File tax extension for 2011 S. File tax extension for 2011 citizens. File tax extension for 2011 This means that their worldwide income is subject to U. File tax extension for 2011 S. File tax extension for 2011 tax and must be reported on their U. File tax extension for 2011 S. File tax extension for 2011 tax return. File tax extension for 2011 Income of resident aliens is subject to the graduated tax rates that apply to U. File tax extension for 2011 S. File tax extension for 2011 citizens. File tax extension for 2011 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. File tax extension for 2011 S. File tax extension for 2011 citizens. File tax extension for 2011 Nonresident Aliens A nonresident alien's income that is subject to U. File tax extension for 2011 S. File tax extension for 2011 income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). File tax extension for 2011 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. File tax extension for 2011 These are the same rates that apply to U. File tax extension for 2011 S. File tax extension for 2011 citizens and residents. File tax extension for 2011 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. File tax extension for 2011 If you were formerly a U. File tax extension for 2011 S. File tax extension for 2011 citizen or resident alien, these rules may not apply. File tax extension for 2011 See Expatriation Tax, later, in this chapter. File tax extension for 2011 Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. File tax extension for 2011 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. File tax extension for 2011 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. File tax extension for 2011 Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. File tax extension for 2011 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. File tax extension for 2011 For more information, see Services Performed for Foreign Employer in chapter 3. File tax extension for 2011 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. File tax extension for 2011 Students and trainees. File tax extension for 2011   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. File tax extension for 2011 A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. File tax extension for 2011 The taxable part of any scholarship or fellowship grant that is U. File tax extension for 2011 S. File tax extension for 2011 source income is treated as effectively connected with a trade or business in the United States. File tax extension for 2011 Business operations. File tax extension for 2011   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. File tax extension for 2011 Partnerships. File tax extension for 2011   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. File tax extension for 2011 Beneficiary of an estate or trust. File tax extension for 2011   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. File tax extension for 2011 Trading in stocks, securities, and commodities. File tax extension for 2011   If your only U. File tax extension for 2011 S. File tax extension for 2011 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. File tax extension for 2011 S. File tax extension for 2011 resident broker or other agent, you are not engaged in a trade or business in the United States. File tax extension for 2011   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. File tax extension for 2011   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. File tax extension for 2011   This discussion does not apply if you have a U. File tax extension for 2011 S. File tax extension for 2011 office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. File tax extension for 2011 Trading for a nonresident alien's own account. File tax extension for 2011   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. File tax extension for 2011 S. File tax extension for 2011 business activity. File tax extension for 2011 This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. File tax extension for 2011   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. File tax extension for 2011 This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. File tax extension for 2011 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . File tax extension for 2011 Effectively Connected Income If you are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. File tax extension for 2011 This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. File tax extension for 2011 Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. File tax extension for 2011 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. File tax extension for 2011 For a discussion of these rules, see Foreign Income , later. File tax extension for 2011 Investment Income Investment income from U. File tax extension for 2011 S. File tax extension for 2011 sources that may or may not be treated as effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business generally falls into the following three categories. File tax extension for 2011 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. File tax extension for 2011 ). File tax extension for 2011 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. File tax extension for 2011 Timber, coal, or domestic iron ore with a retained economic interest. File tax extension for 2011 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. File tax extension for 2011 Patents transferred before October 5, 1966. File tax extension for 2011 Original issue discount obligations. File tax extension for 2011 Capital gains (and losses). File tax extension for 2011 Use the two tests, described next, to determine whether an item of U. File tax extension for 2011 S. File tax extension for 2011 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. File tax extension for 2011 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. File tax extension for 2011 Asset-use test. File tax extension for 2011   This test usually applies to income that is not directly produced by trade or business activities. File tax extension for 2011 Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. File tax extension for 2011   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. File tax extension for 2011 Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. File tax extension for 2011 Business-activities test. File tax extension for 2011   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. File tax extension for 2011 The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. File tax extension for 2011 Under this test, if the conduct of the U. File tax extension for 2011 S. File tax extension for 2011 trade or business was a material factor in producing the income, the income is considered effectively connected. File tax extension for 2011 Personal Service Income You usually are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business when you perform personal services in the United States. File tax extension for 2011 Personal service income you receive in a tax year in which you are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business is effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. File tax extension for 2011 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. File tax extension for 2011 The income may be paid to you in the form of cash, services, or property. File tax extension for 2011 If you are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. File tax extension for 2011 However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. File tax extension for 2011 Pensions. File tax extension for 2011   If you were a nonresident alien engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. File tax extension for 2011 This is true whether or not you are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business in the year you receive the retirement pay. File tax extension for 2011 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. File tax extension for 2011 You had a fixed place of business in the United States involved in earning the income. File tax extension for 2011 At least 90% of your U. File tax extension for 2011 S. File tax extension for 2011 source transportation income is attributable to regularly scheduled transportation. File tax extension for 2011 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. File tax extension for 2011 “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. File tax extension for 2011 This definition applies to both scheduled and chartered air transportation. File tax extension for 2011 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. File tax extension for 2011 See Transportation Tax, later, in this chapter. File tax extension for 2011 Business Profits and Losses and Sales Transactions All profits or losses from U. File tax extension for 2011 S. File tax extension for 2011 sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. File tax extension for 2011 For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. File tax extension for 2011 A share of U. File tax extension for 2011 S. File tax extension for 2011 source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. File tax extension for 2011 Real Property Gain or Loss Gains and losses from the sale or exchange of U. File tax extension for 2011 S. File tax extension for 2011 real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. File tax extension for 2011 You must treat the gain or loss as effectively connected with that trade or business. File tax extension for 2011 U. File tax extension for 2011 S. File tax extension for 2011 real property interest. File tax extension for 2011   This is any interest in real property located in the United States or the U. File tax extension for 2011 S. File tax extension for 2011 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation. File tax extension for 2011 Real property includes the following. File tax extension for 2011 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. File tax extension for 2011 Improvements on land, including buildings, other permanent structures, and their structural components. File tax extension for 2011 Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. File tax extension for 2011 U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation. File tax extension for 2011   A corporation is a U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation if the fair market value of the corporation's U. File tax extension for 2011 S. File tax extension for 2011 real property interests are at least 50% of the total fair market value of: The corporation's U. File tax extension for 2011 S. File tax extension for 2011 real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. File tax extension for 2011   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business unless you establish that the corporation is not a U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation. File tax extension for 2011   A U. File tax extension for 2011 S. File tax extension for 2011 real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. File tax extension for 2011 An interest in a foreign corporation owning U. File tax extension for 2011 S. File tax extension for 2011 real property generally is not a U. File tax extension for 2011 S. File tax extension for 2011 real property interest unless the corporation chooses to be treated as a domestic corporation. File tax extension for 2011 Qualified investment entities. File tax extension for 2011   Special rules apply to qualified investment entities (QIEs). File tax extension for 2011 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation. File tax extension for 2011    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest is treated as a U. File tax extension for 2011 S. File tax extension for 2011 real property gain by the shareholder receiving the distribution. File tax extension for 2011 A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. File tax extension for 2011 A distribution that you do not treat as gain from the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest is included in your gross income as a regular dividend. File tax extension for 2011 Note. File tax extension for 2011 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. File tax extension for 2011 S. File tax extension for 2011 real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. File tax extension for 2011 Domestically controlled QIE. File tax extension for 2011   The sale of an interest in a domestically controlled QIE is not the sale of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest. File tax extension for 2011 The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. File tax extension for 2011 The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. File tax extension for 2011 Wash sale. File tax extension for 2011    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. File tax extension for 2011 An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. File tax extension for 2011 If this occurs, you are treated as having gain from the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. File tax extension for 2011 This also applies to any substitute dividend payment. File tax extension for 2011   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. File tax extension for 2011 Alternative minimum tax. File tax extension for 2011   There may be a minimum tax on your net gain from the disposition of U. File tax extension for 2011 S. File tax extension for 2011 real property interests. File tax extension for 2011 Figure the amount of this tax, if any, on Form 6251. File tax extension for 2011 Withholding of tax. File tax extension for 2011   If you dispose of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest, the buyer may have to withhold tax. File tax extension for 2011 See the discussion of Tax Withheld on Real Property Sales in chapter 8. File tax extension for 2011 Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. File tax extension for 2011 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. File tax extension for 2011 The three kinds of foreign source income are listed below. File tax extension for 2011 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. File tax extension for 2011 Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. File tax extension for 2011 Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. File tax extension for 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. File tax extension for 2011 Income, gain, or loss from the sale outside the United States, through the U. File tax extension for 2011 S. File tax extension for 2011 office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. File tax extension for 2011 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. File tax extension for 2011 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 For example, foreign source interest and dividend equivalents are treated as U. File tax extension for 2011 S. File tax extension for 2011 effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. File tax extension for 2011 Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. File tax extension for 2011 S. File tax extension for 2011 citizens and residents. File tax extension for 2011 Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. File tax extension for 2011 However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. File tax extension for 2011 Example. File tax extension for 2011 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. File tax extension for 2011 S. File tax extension for 2011 office of his overseas employer. File tax extension for 2011 He worked in the U. File tax extension for 2011 S. File tax extension for 2011 office until December 25, 2012, but did not leave this country until January 11, 2013. File tax extension for 2011 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. File tax extension for 2011 All of Ted's income during his stay here is U. File tax extension for 2011 S. File tax extension for 2011 source income. File tax extension for 2011 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. File tax extension for 2011 Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. File tax extension for 2011 The salary payment Ted received in January 2013 is U. File tax extension for 2011 S. File tax extension for 2011 source income to him in 2013. File tax extension for 2011 It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. File tax extension for 2011 Real property income. File tax extension for 2011   You may be able to choose to treat all income from real property as effectively connected. File tax extension for 2011 See Income From Real Property , later, in this chapter. File tax extension for 2011 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. File tax extension for 2011 S. File tax extension for 2011 sources but only if the items are not effectively connected with your U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. File tax extension for 2011 S. File tax extension for 2011 source fixed or determinable annual or periodic gains, profits, or income. File tax extension for 2011 Income is fixed when it is paid in amounts known ahead of time. File tax extension for 2011 Income is determinable whenever there is a basis for figuring the amount to be paid. File tax extension for 2011 Income can be periodic if it is paid from time to time. File tax extension for 2011 It does not have to be paid annually or at regular intervals. File tax extension for 2011 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. File tax extension for 2011 Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. File tax extension for 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. File tax extension for 2011 Other items of income, such as royalties, also may be subject to the 30% tax. File tax extension for 2011 Some fixed or determinable income may be exempt from U. File tax extension for 2011 S. File tax extension for 2011 tax. File tax extension for 2011 See chapter 3 if you are not sure whether the income is taxable. File tax extension for 2011 Original issue discount (OID). File tax extension for 2011   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. File tax extension for 2011 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. File tax extension for 2011 The 30% tax applies in the following circumstances. File tax extension for 2011 You received a payment on a debt instrument. File tax extension for 2011 In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. File tax extension for 2011 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. File tax extension for 2011 You sold or exchanged the debt instrument. File tax extension for 2011 The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. File tax extension for 2011   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. File tax extension for 2011 S. File tax extension for 2011 Source Income Subject to Withholding, if you bought the debt instrument at original issue. File tax extension for 2011 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. File tax extension for 2011 You bought the debt instrument at a premium or paid an acquisition premium. File tax extension for 2011 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. File tax extension for 2011 S. File tax extension for 2011 Treasury securities). File tax extension for 2011 The debt instrument is a contingent payment or inflation-indexed debt instrument. File tax extension for 2011 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. File tax extension for 2011   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. File tax extension for 2011 See chapter 12. File tax extension for 2011 Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business and is not exempted by treaty. File tax extension for 2011 However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. File tax extension for 2011 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 Social Security Benefits A nonresident alien must include 85% of any U. File tax extension for 2011 S. File tax extension for 2011 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. File tax extension for 2011 S. File tax extension for 2011 source fixed or determinable annual or periodic income. File tax extension for 2011 Social security benefits include monthly retirement, survivor, and disability benefits. File tax extension for 2011 This income is exempt under some tax treaties. File tax extension for 2011 See Table 1 in Publication 901, U. File tax extension for 2011 S. File tax extension for 2011 Tax Treaties, for a list of tax treaties that exempt U. File tax extension for 2011 S. File tax extension for 2011 social security benefits from U. File tax extension for 2011 S. File tax extension for 2011 tax. File tax extension for 2011 Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. File tax extension for 2011 They apply even if you are engaged in a trade or business in the United States. File tax extension for 2011 These rules do not apply to the sale or exchange of a U. File tax extension for 2011 S. File tax extension for 2011 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. File tax extension for 2011 See Real Property Gain or Loss , earlier, under Effectively Connected Income. File tax extension for 2011 A capital asset is everything you own except: Inventory. File tax extension for 2011 Business accounts or notes receivable. File tax extension for 2011 Depreciable property used in a trade or business. File tax extension for 2011 Real property used in a trade or business. File tax extension for 2011 Supplies regularly used in a trade or business. File tax extension for 2011 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. File tax extension for 2011 Certain U. File tax extension for 2011 S. File tax extension for 2011 government publications. File tax extension for 2011 Certain commodities derivative financial instruments held by a commodities derivatives dealer. File tax extension for 2011 Hedging transactions. File tax extension for 2011 A capital gain is a gain on the sale or exchange of a capital asset. File tax extension for 2011 A capital loss is a loss on the sale or exchange of a capital asset. File tax extension for 2011 If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. File tax extension for 2011 S. File tax extension for 2011 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. File tax extension for 2011 You may want to read Publication 544. File tax extension for 2011 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. File tax extension for 2011 Specific tax treatment that applies to U. File tax extension for 2011 S. File tax extension for 2011 citizens or residents generally does not apply to you. File tax extension for 2011 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. File tax extension for 2011 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. File tax extension for 2011 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. File tax extension for 2011 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. File tax extension for 2011 Gains on the sale or exchange of original issue discount obligations. File tax extension for 2011 Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 See Income From Real Property , later. File tax extension for 2011 183-day rule. File tax extension for 2011   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. File tax extension for 2011 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. File tax extension for 2011 S. File tax extension for 2011 sources over your capital losses from U. File tax extension for 2011 S. File tax extension for 2011 sources. File tax extension for 2011 This rule applies even if any of the transactions occurred while you were not in the United States. File tax extension for 2011   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. File tax extension for 2011   In arriving at your net gain, do not take the following into consideration. File tax extension for 2011 The four types of gains listed earlier. File tax extension for 2011 The deduction for a capital loss carryover. File tax extension for 2011 Capital losses in excess of capital gains. File tax extension for 2011 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). File tax extension for 2011 Losses from the sale or exchange of property held for personal use. File tax extension for 2011 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). File tax extension for 2011 See Itemized Deductions in chapter 5. File tax extension for 2011   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. File tax extension for 2011 Also, you must file your tax return on a calendar-year basis. File tax extension for 2011   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. File tax extension for 2011 Reporting. File tax extension for 2011   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. File tax extension for 2011 Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. File tax extension for 2011 Attach them to Form 1040NR. File tax extension for 2011 Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. File tax extension for 2011 The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. File tax extension for 2011 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. File tax extension for 2011 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. File tax extension for 2011 You can make this choice only for real property income that is not otherwise effectively connected with your U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. File tax extension for 2011 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business, as being engaged in a trade or business in the United States during the year. File tax extension for 2011 Example. File tax extension for 2011 You are a nonresident alien and are not engaged in a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 You own a single-family house in the United States that you rent out. File tax extension for 2011 Your rental income for the year is $10,000. File tax extension for 2011 This is your only U. File tax extension for 2011 S. File tax extension for 2011 source income. File tax extension for 2011 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. File tax extension for 2011 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. File tax extension for 2011 You do not have to file a U. File tax extension for 2011 S. File tax extension for 2011 tax return (Form 1040NR) because your U. File tax extension for 2011 S. File tax extension for 2011 tax liability is satisfied by the withholding of tax. File tax extension for 2011 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. File tax extension for 2011 (See Publication 527, Residential Rental Property, for information on rental expenses. File tax extension for 2011 ) Any resulting net income is taxed at graduated rates. File tax extension for 2011 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. File tax extension for 2011 For the first year you make the choice, also attach the statement discussed next. File tax extension for 2011 Making the choice. File tax extension for 2011   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. File tax extension for 2011 Include the following in your statement. File tax extension for 2011 That you are making the choice. File tax extension for 2011 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. File tax extension for 2011 A complete list of all your real property, or any interest in real property, located in the United States. File tax extension for 2011 Give the legal identification of U. File tax extension for 2011 S. File tax extension for 2011 timber, coal, or iron ore in which you have an interest. File tax extension for 2011 The extent of your ownership in the property. File tax extension for 2011 The location of the property. File tax extension for 2011 A description of any major improvements to the property. File tax extension for 2011 The dates you owned the property. File tax extension for 2011 Your income from the property. File tax extension for 2011 Details of any previous choices and revocations of the real property income choice. File tax extension for 2011   This choice stays in effect for all later tax years unless you revoke it. File tax extension for 2011 Revoking the choice. File tax extension for 2011   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. File tax extension for 2011 S. File tax extension for 2011 Individual Income Tax Return, for the year you made the choice and for later tax years. File tax extension for 2011 You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. File tax extension for 2011 If this time period has expired for the year of choice, you cannot revoke the choice for that year. File tax extension for 2011 However, you may revoke the choice for later tax years only if you have IRS approval. File tax extension for 2011 For information on how to get IRS approval, see Regulation section 1. File tax extension for 2011 871-10(d)(2). File tax extension for 2011 Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . File tax extension for 2011 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. File tax extension for 2011 Attach a statement to your return that includes the following information (if applicable). File tax extension for 2011 Your name, taxpayer identification number, and tax year. File tax extension for 2011 A description of the types of services performed (whether on or off board). File tax extension for 2011 Names of vessels or registration numbers of aircraft on which you performed the services. File tax extension for 2011 Amount of U. File tax extension for 2011 S. File tax extension for 2011 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. File tax extension for 2011 Total amount of U. File tax extension for 2011 S. File tax extension for 2011 source transportation income derived from all types of services for the calendar year. File tax extension for 2011 This 4% tax applies to your U. File tax extension for 2011 S. File tax extension for 2011 source gross transportation income. File tax extension for 2011 This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. File tax extension for 2011 For transportation income from personal services, the transportation must be between the United States and a U. File tax extension for 2011 S. File tax extension for 2011 possession. File tax extension for 2011 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. File tax extension for 2011 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. File tax extension for 2011 S. File tax extension for 2011 residence with a period of nonresidence. File tax extension for 2011 The special rule applies if you meet all of the following conditions. File tax extension for 2011 You were a U. File tax extension for 2011 S. File tax extension for 2011 resident for a period that includes at least 3 consecutive calendar years. File tax extension for 2011 You were a U. File tax extension for 2011 S. File tax extension for 2011 resident for at least 183 days in each of those years. File tax extension for 2011 You ceased to be treated as a U. File tax extension for 2011 S. File tax extension for 2011 resident. File tax extension for 2011 You then again became a U. File tax extension for 2011 S. File tax extension for 2011 resident before the end of the third calendar year after the end of the period described in (1) above. File tax extension for 2011 Under this special rule, you are subject to tax on your U. File tax extension for 2011 S. File tax extension for 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. File tax extension for 2011 Example. File tax extension for 2011 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. File tax extension for 2011 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. File tax extension for 2011 During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). File tax extension for 2011 He returned to the United States on October 5, 2013, as a lawful permanent resident. File tax extension for 2011 He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). File tax extension for 2011 Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. File tax extension for 2011 Reporting requirements. File tax extension for 2011   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. File tax extension for 2011 The return is due by the due date (including extensions) for filing your U. File tax extension for 2011 S. File tax extension for 2011 income tax return for the year that you again become a U. File tax extension for 2011 S. File tax extension for 2011 resident. File tax extension for 2011 If you already filed returns for that period, you must file amended returns. File tax extension for 2011 You must attach a statement to your return that identifies the source of all of your U. File tax extension for 2011 S. File tax extension for 2011 and foreign gross income and the items of income subject to this special rule. File tax extension for 2011 Expatriation Tax The expatriation tax provisions apply to U. File tax extension for 2011 S. File tax extension for 2011 citizens who have renounced their citizenship and long-term residents who have ended their residency. File tax extension for 2011 The rules that apply are based on the dates of expatriation, which are described in the following sections. File tax extension for 2011 Expatriation Before June 4, 2004. File tax extension for 2011 Expatriation After June 3, 2004, and Before June 17, 2008. File tax extension for 2011 Expatriation After June 16, 2008. File tax extension for 2011 Long-term resident defined. File tax extension for 2011   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. File tax extension for 2011 In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. File tax extension for 2011 Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. File tax extension for 2011 S. File tax extension for 2011 taxes. File tax extension for 2011 Unless you received a ruling from the IRS that you did not expatriate to avoid U. File tax extension for 2011 S. File tax extension for 2011 taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. File tax extension for 2011 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). File tax extension for 2011 Table 4-1. File tax extension for 2011 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . File tax extension for 2011 . File tax extension for 2011 . File tax extension for 2011   THEN the rules outlined on this page apply if . File tax extension for 2011 . File tax extension for 2011 . File tax extension for 2011     Your 5-year average annual net income tax was more than . File tax extension for 2011 . File tax extension for 2011 . File tax extension for 2011 OR Your net worth equaled or exceeded . File tax extension for 2011 . File tax extension for 2011 . File tax extension for 2011 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. File tax extension for 2011 Reporting requirements. File tax extension for 2011   If you lost your U. File tax extension for 2011 S. File tax extension for 2011 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. File tax extension for 2011 If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. File tax extension for 2011   Your U. File tax extension for 2011 S. File tax extension for 2011 residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. File tax extension for 2011 Penalties. File tax extension for 2011   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. File tax extension for 2011 The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. File tax extension for 2011 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. File tax extension for 2011 Expatriation tax. File tax extension for 2011   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. File tax extension for 2011 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. File tax extension for 2011 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. File tax extension for 2011 Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. File tax extension for 2011 Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. File tax extension for 2011 $127,000 if you expatriated or terminated residency in 2005. File tax extension for 2011 $131,000 if you expatriated or terminated residency in 2006. File tax extension for 2011 $136,000 if you expatriated or terminated residency in 2007. File tax extension for 2011 $139,000 if you expatriated or terminated residency in 2008. File tax extension for 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. File tax extension for 2011 You fail to certify on Form 8854 that you have complied with all U. File tax extension for 2011 S. File tax extension for 2011 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. File tax extension for 2011 Exception for dual-citizens and certain minors. File tax extension for 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. File tax extension for 2011 However, they still must provide the certification required in (3). File tax extension for 2011 Certain dual-citizens. File tax extension for 2011   You may qualify for the exception described above if all of the following apply. File tax extension for 2011 You became at birth a U. File tax extension for 2011 S. File tax extension for 2011 citizen and a citizen of another country and you continue to be a citizen of that other country. File tax extension for 2011 You were never a resident alien of the United States (as defined in chapter 1). File tax extension for 2011 You never held a U. File tax extension for 2011 S. File tax extension for 2011 passport. File tax extension for 2011 You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. File tax extension for 2011 S. File tax extension for 2011 citizenship. File tax extension for 2011 Certain minors. File tax extension for 2011   You may qualify for the exception described above if you meet all of the following requirements. File tax extension for 2011 You became a U. File tax extension for 2011 S. File tax extension for 2011 citizen at birth. File tax extension for 2011 Neither of your parents was a U. File tax extension for 2011 S. File tax extension for 2011 citizen at the time of your birth. File tax extension for 2011 You expatriated before you were 18½. File tax extension for 2011 You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. File tax extension for 2011 Tax consequences of presence in the United States. File tax extension for 2011   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. File tax extension for 2011   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. File tax extension for 2011 Instead, you are treated as a U. File tax extension for 2011 S. File tax extension for 2011 citizen or resident and taxed on your worldwide income for that tax year. File tax extension for 2011 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. File tax extension for 2011   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. File tax extension for 2011 However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. File tax extension for 2011 You have ties with other countries. File tax extension for 2011 You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. File tax extension for 2011 You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. File tax extension for 2011 Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. File tax extension for 2011 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. File tax extension for 2011 Related employer. File tax extension for 2011   If your employer in the United States is any of the following, then your employer is related to you. File tax extension for 2011 You must count any days you performed services in the United States for that employer as days of presence in the United States. File tax extension for 2011 Members of your family. File tax extension for 2011 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. File tax extension for 2011 ), and lineal descendants (children, grandchildren, etc. File tax extension for 2011 ). File tax extension for 2011 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. File tax extension for 2011 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. File tax extension for 2011 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. File tax extension for 2011 ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. File tax extension for 2011 Date of tax expatriation. File tax extension for 2011   For purposes of U. File tax extension for 2011 S. File tax extension for 2011 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. File tax extension for 2011 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. File tax extension for 2011 You file Form 8854 in accordance with the form instructions. File tax extension for 2011 Annual return. File tax extension for 2011   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. File tax extension for 2011 You must file this form even if you owe no U. File tax extension for 2011 S. File tax extension for 2011 tax. File tax extension for 2011 Penalty. File tax extension for 2011   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. File tax extension for 2011 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. File tax extension for 2011 How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. File tax extension for 2011 S. File tax extension for 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. File tax extension for 2011 S. File tax extension for 2011 trade or business. File tax extension for 2011 For this purpose, U. File tax extension for 2011 S. File tax extension for 2011 source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. File tax extension for 2011 S. File tax extension for 2011 domestic corporation, and Debt obligations of U. File tax extension for 2011 S. File tax extension for 2011 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. File tax extension for 2011 U. File tax extension for 2011 S. File tax extension for 2011 source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. File tax extension for 2011 The income or gain is considered U. File tax extension for 2011 S. File tax extension for 2011 source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. File tax extension for 2011 Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. File tax extension for 2011 S. File tax extension for 2011 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. File tax extension for 2011 Other information. File tax extension for 2011   For more information on the expatriation tax provisions, including exceptions to the tax and special U. File tax extension for 2011 S. File tax extension for 2011 source rules, see section 877 of the Internal Revenue Code. File tax extension for 2011 Expatriation Tax Return If you expatriated or terminated your U. File tax extension for 2011 S. File tax extension for 2011 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. File tax extension for 2011 Attach it to Form 1040NR if you are required to file that form. File tax extension for 2011 If you are present in the United States following your expatriation and are subject to tax as a U. File tax extension for 2011 S. File tax extension for 2011 citizen or resident, file Form 8854 with Form 1040. File tax extension for 2011 Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. File tax extension for 2011 Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. File tax extension for 2011 $145,000 if you expatriated or terminated residency in 2009 or 2010. File tax extension for 2011 $147,000 if you expatriated or terminated residency in 2011. File tax extension for 2011 $151,000 if you expatriated or terminated residency in 2012. File tax extension for 2011 $155,000 if you expatriated or terminated residency in 2013. File tax extension for 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. File tax extension for 2011 You fail to certify on Form 8854 that you have complied with all U. File tax extension for 2011 S. File tax extension for 2011 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. File tax extension for 2011 Exception for dual-citizens and certain minors. File tax extension for 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. File tax extension for 2011 However, they still must provide the certification required in (3) above. File tax extension for 2011 Certain dual-citizens. File tax extension for 2011   You may qualify for the exception described above if both of the following apply. File tax extension for 2011 You became at birth a U. File tax extension for 2011 S. File tax extension for 2011 citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. File tax extension for 2011 You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. File tax extension for 2011 For the purpose of determining U. File tax extension for 2011 S. File tax extension for 2011 residency, use the substantial presence test described in chapter 1. File tax extension for 2011 Certain minors. File tax extension for 2011   You may qualify for the exception described earlier if you meet both of the following requirements. File tax extension for 2011 You expatriated before you were 18½. File tax extension for 2011 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. File tax extension for 2011 For the purpose of determining U. File tax extension for 2011 S. File tax extension for 2011 residency, use the substantial presence test described in chapter 1. File tax extension for 2011 Expatriation date. File tax extension for 2011   Your expatriation date is the date you relinquish U. File tax extension for 2011 S. File tax extension for 2011 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. File tax extension for 2011 S. File tax extension for 2011 resident). File tax extension for 2011 Former U. File tax extension for 2011 S. File tax extension for 2011 citizen. File tax extension for 2011   You are considered to have relinquished your U. File tax extension for 2011 S. File tax extension for 2011 citizenship on the earliest of the following dates. File tax extension for 2011 The date you renounced U. File tax extension for 2011 S. File tax extension for 2011 citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). File tax extension for 2011 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. File tax extension for 2011 S. File tax extension for 2011 nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). File tax extension for 2011 The date the State Department issued a certificate of loss of nationality. File tax extension for 2011 The date that a U. File tax extension for 2011 S. File tax extension for 2011 court canceled your certificate of naturalization. File tax extension for 2011 Former long-term resident. File tax extension for 2011   You are considered to have terminated your long-term residency on the earliest of the following dates. File tax extension for 2011 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. File tax extension for 2011 S. File tax extension for 2011 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. File tax extension for 2011 The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. File tax extension for 2011 If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. File tax extension for 2011 See Effect of Tax Treaties in chapter 1 for more information about dual residents. File tax extension for 2011 How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). File tax extension for 2011 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. File tax extension for 2011 But see Exceptions , later. File tax extension for 2011 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. File tax extension for 2011 S. File tax extension for 2011 internal revenue laws. File tax extension for 2011 Losses from deemed sales must be taken into account to the extent otherwise provided under U. File tax extension for 2011 S. File tax extension for 2011 internal revenue laws. File tax extension for 2011 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. File tax extension for 2011 The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. File tax extension for 2011 $626,000 if you expatriated or terminated residency in 2009. File tax extension for 2011 $627,000 if you expatriated or terminated residency in 2010. File tax extension for 2011 $636,000 if you expatriated or terminated residency in 2011. File tax extension for 2011 $651,000 if you expatriated or terminated residency in 2012. File tax extension for 2011 $668,000 if you expatriated or terminated residency in 2013. File tax extension for 2011 Exceptions. File tax extension for 2011   The mark-to-market tax does not apply to the following. File tax extension for 2011 Eligible deferred compensation items. File tax extension for 2011 Ineligible deferred compensation items. File tax extension for 2011 Interests in nongrantor trusts. File tax extension for 2011 Specified tax deferred accounts. File tax extension for 2011 Instead, items (1) and (3) may be subject to withholding at source. File tax extension for 2011 In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. File tax extension for 2011 In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. File tax extension for 2011 See paragraphs (d), (e), and (f) of section 877A for more information. File tax extension for 2011 Expatriation Tax Return If you expatriated or terminated your U. File tax extension for 2011 S. File tax extension for 2011 residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. File tax extension for 2011 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. File tax extension for 2011 Deferral of payment of mark-to-market tax. File tax extension for 2011   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. File tax extension for 2011 If you make this election, the following rules apply. File tax extension for 2011 You can make the election on a property-by-property basis. File tax extension for 2011 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. File tax extension for 2011 Interest is charged for the period the tax is deferred. File tax extension for 2011 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. File tax extension for 2011 The due date of the return required for the year of death. File tax extension for 2011 The time that the security provided for the property fails to be adequate. File tax extension for 2011 See item (6) below. File tax extension for 2011 You make the election on Form 8854. File tax extension for 2011 You must provide adequate security (such as a bond). File tax extension for 2011 You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. File tax extension for 2011   For more information about the deferral of payment, see the Instructions for Form 8854. File tax extension for 2011 Prev  Up  Next   Home   More Online Publications